ZURICH (Reuters) – Swisscom, Sunrise and Salt have paid a relatively modest 380 million Swiss francs ($379 million) for fifth-generation wireless frequencies that will tighten their grip on the Swiss mobile market.
FILE PHOTO: The logo of Switzerland’s Swisscom telecommunications is seen at an office building in Zurich, Switzerland November 22, 2016. REUTERS/Arnd Wiegmann/File Photo
The three were able to secure an attractively priced deal after a fourth company, London-based newcomer Dense Air, dropped out of the process, auction results showed on Friday.
The exit of Dense Air — part of the Airspan Group that hosts 4G and 5G mobile phone networks in Europe, Australia and New Zealand — also removes a potential rival for the three companies in the already crowded Swiss mobile market.
The outcome in Switzerland contrasts with neighbouring Germany, where three big mobile operators face competition from a fourth operator in bidding for a slice of 5G spectrum.
And the amount raised in the Swiss auction is also much smaller than Italy’s 6.5 billion euros ($7.37 billion) 5G sale last year, while Germany could raise 4 billion to 5 billion euros in its 5G auction, according to a report in Handelsblatt.
Telecoms operators are keen for 5G frequencies to gain an edge in new digital services such as powering the Internet of Things – everyday objects which can communicate via the Internet – industrial automation and autonomous vehicles.
“It was positive for the companies involved that the prices they paid were pretty low -– less than half of the previous auction in 2012 for 4G,” said Andreas Mueller, an analyst at Zuercher Kantonalbank.
Mueller said the timing of the auction favored Swisscom, which could invest quickly to roll out 5G technology. Swisscom has already successfully tested 5G applications and has test networks in Lausanne, Geneva, Zurich, Bern, Davos and Lucerne.
“It was good news for all the companies that no fourth player entered the market because this means less price pressure on them,” Mueller said.
Analysts at Jefferies said: “The result is a relief on two fronts: there is no new entrant and the prices remained modest despite a fourth bidder.”
Sunrise shares rose 1 percent and Swisscom 0.5 percent by 1100 GMT.
The bidding, which covered blocks of frequencies within the 700 MHz, 1400 MHz, 2.6 GHz and 3.5 GHz ranges, had been expected to raise at least 220 million Swiss francs, with the proceeds going to the Swiss treasury as extraordinary revenue.
Swisscom offered 195.5 million francs; Salt 94.5 million francs and Sunrise 89.2 million francs for parts of the frequencies, which will be assigned for 15 years.
Privately held Salt said it was “extremely satisfied” with the outcome of the auction. Its acquisition will allow it to provide deeper indoor high-speed coverage and speed up mobile broadband access.
State-controlled Swisscom said it bought 46 percent of the frequencies sold and considered the price to be a long-term investment in the future of the mobile market.
It said its 196 million franc bid was not included in 2019’s projected capital investments of around 2.3 billion francs.
Both Swisscom and Sunrise said their bids would have no impact on dividend policy, a key consideration for investors in telecoms companies.
Dense Air was not immediately available for comment.
Four companies have applied to take part in Germany’s auction of 5G licences.
Deutsche Telekom , Vodafone , Telefonica Deutschland (O2Dn.DE) and 1&1 Drillisch , a unit of United Internet , are expected to bid in the second-half of March.
($1 = 1.0017 Swiss francs)
($1 = 0.8821 euros)
Reporting by John Revill; Editing by Michael Shields/Kirsten Donovan/Jane Merriman